Tiered CBDC and the Financial System

Bindseil, Ulrich

doi:10.2139/ssrn.3513422

Cited by 133 publications

(85 citation statements)

References 6 publications

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“…In addition, central banks could charge a fee if necessary. Such a refresh fee when coins are set to expire would effectively mean negative interest rates on CBDC and make CBDC less attractive as a store of value, as suggested by Bindseil (2020). In fact, it would be a straightforward implementation of Silvio Gesell's idea of a carry tax on currency, famously referenced by Keynes (1936) and revived by Goodfriend (2000), Buiter and Panigirtzoglou (2003), and Agarwal and Kimball (2019).…”

Section: Regulatory and Policy Considerationsmentioning

confidence: 99%

“…The more such a CBDC would compete with commercial bank deposits, the greater the threat to bank funding with a potential adverse impact on bank credit and economic activity (see Agur et al 2019). However, a retail CBDC could also have benefits (see Bordo and Levin 2017, Berentsen and Schär 2018, Bindseil 2020, Niepelt 2020, Sveriges Riksbank 2020, and Bank of England 2020. Making electronic central bank money without counterparty risk available to everyone could improve the stability and resilience of the retail payment system.…”

Section: Introductionmentioning

confidence: 99%

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How to issue a central bank digital currency

Chaum¹,

Grothoff²,

Moser³

2021

SSRN Journal

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Section: Regulatory and Policy Considerationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

How to issue a central bank digital currency

Chaum¹,

Grothoff²,

Moser³

2021

SSRN Journal

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“…The effects of introducing CBDC are receiving more attention than ever before. Although the concept of a CBDC was already proposed decades ago [25], recent IT progress and its application to the financial industry have motivated central banks and academics to study the risks and merits of making CBDC accessible to the general public [5,7], as presented in Table 1 [1]. Further, attitudes towards whether CBDCs should be issued by central banks have changed drastically over the past year.…”

Section: Central Bank Digital Currency (Cbdc)mentioning

confidence: 99%

Data-driven analysis of central bank digital currency (CBDC) projects drivers

Matsui,

Perez

2021

Preprint

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In this paper, we use a variety of machine learning methods to quantify the extent to which economic and technological factors are predictive of the progression of Central Bank Digital Currencies (CBDC) within a country, using as our measure of this progression the CBDC project index (CBDCPI). We find that a financial development index is the most important feature for our model, followed by the GDP per capita and an index of the voice and accountability of the country's population. Our results are consistent with previous qualitative research which finds that countries with a high degree of financial development or digital infrastructure have more developed CBDC projects. Further, we obtain robust results when predicting the CBDCPI at different points in time.

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“…Therefore, with this regard they would, from a genuine DLT point of view, be preferable compared to intermediary issued e-Money. Regardless of the design, CBDCs would comply with current regulation [17]. Currency sovereignty is part of state sovereignty, so a central control point remains unavoidable.…”

Section: Dlt-issued E-moneymentioning

confidence: 99%

Regulation conform DLT-operable payment adapter based on trustless - justified trust combined generalized state channels

Lamberty¹,

Poddey²

2020

Preprint

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Open technologies, decentralized computation and intelligent applications enable the third-generation web, Web 3.0, thereby digitizing whole industries. The emerging Economy of Things (EoT) will be based on software agents running on peer-to-peer trustless networks that require a programmable, regulation conform means of payment. We give an overview of current solutions that differ in their fundamental values and technological possibilities, like e.g. private-issued stablecoins, DLT-issued electronic money and genuine cryptocurrencies. Based on this analysis, we present the concept of justified trust and propose to combine the strengths of the crypto based, decentralized trustless elements with established and well regulated means of payment, based on this concept, via a secure external re-balancing interface.Combining the advantages, e.g. lightweight, trustless, efficient high frequency micro state transfers on the one hand, and ease of use, widely spread, accepted alignment to a multitude of regulative requirements, on the other hand, while neither leading into a lock-in in any of the proposed solutions, nor undermining the basic principles of the crypto-movement or unnecessarily reinforcing the banking system provides a synergy and the necessary flexibility for further evolution alongside the regulative framework. This offers a regulation conform transitional solution that can be implemented in the short term, which enables companies to place their decentralized business operations in a regulated environment.The contribution of our work is twofold: First, we illustrate and discuss different DLT-operable means of payment. Second, our research proposes a novel hybrid payment solution by interfacing trustless with justified trust combined generalized state channels.

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Tiered CBDC and the Financial System

Abstract: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB.

Cited by 133 publications

References 6 publications

How to issue a central bank digital currency

How to issue a central bank digital currency

Data-driven analysis of central bank digital currency (CBDC) projects drivers

Regulation conform DLT-operable payment adapter based on trustless - justified trust combined generalized state channels

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